Safeguarding my home mortgage

Use life insurance as mortgage protection to safeguard your home

New York Life can help alleviate some of the worry that comes with ownership. There's always the concern that your family will face difficulties paying off the mortgage in the event that you become disabled* and cannot work, or suddenly die.

This is why many mortgage contracts include a clause that states, “At the death of any signer, the contract is subject to renegotiation…” The loss of an income can lead to foreclosure. That's why a number of banks and mortgage companies encourage homeowners to purchase mortgage insurance, especially if your down payment is less than 20% of the home's price.

Basically, you have two options for safeguarding your mortgage: mortgage protection insurance (PMI) and personally-owned life insurance.

PMI vs. Personally-Owned Life Insurance

PMI is a certain type of insurance policy from a bank or mortgage company in which you pay a fixed premium for a certain number of years to cover the risk of foreclosure. Should something happen to you while the policy is in effect, the insurance pays the remaining mortgage. The loan typically lasts for the life of the mortgage. As you pay off your mortgage, your end benefit goes down, too. At the end of the policy, the benefit is zero.

Personally-owned life insurance offers a different option. Essentially you pay the premiums, and your family gets the money—and the right to decide what to do with it.

Also, personally-owned life insurance is portable. This means if you move in a few years, you won't have to replace your insurance. This can save you a great deal of money since insurance rates usually increase as you get older.

New York Life offers a variety of insurance products that can help ensure your family's financial security—even after you've gone. Mortgage protectors include permanent life insurance , term life insurance Permanent Life Insurance:A term used to describe various life insurance policies in force throughout an insureds lifetime provided premiums are paid. It also generally refers to insurance that accumulates cash value. Examples of permanent life insurance are whole life, universal life or variable universal life., or a combination of term and permanent life insurance. If purchased in an adequate amount, the death benefit can be used to help retire the mortgage as well as help your family solve other financial concerns.

• Did you know…?
  Unless you have a 20% down payment, most lenders require mortgage insurance.
• Did you know…?
  Let's say you borrowed $100,000 on a 30-year mortgage at 8% interest. Your monthly principal and interest payment come to $734. Not too bad, perhaps. However, consider that the total interest you will pay over the term of the loan will add up to more than $164,000 on top of the $100,000 principal, meaning you will repay a total of $264,000 on a $100,000 mortgage.

To find a Local New York Life agent who will be happy to discuss your life insurance needs, click on the talk to us.